Question

In: Finance

Sheel Inc. has a 6 percent coupon (compounded semiannually) bonds on the market with 16 years...

Sheel Inc. has a 6 percent coupon (compounded semiannually) bonds on the market with 16 years to maturity, and the par value of $1,000. At what price should the bonds be selling for if TYM is 5%? Had the bond been selling at $919.50, what should be the YTM (assuming the same coupon, maturity, and par value)? Based on your answers above, what is the relationship between YTM and bond price?

***Please show all work***

Expert Solution

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k] + Par value/(1 + YTM/2)^Nx2

k=1

K =16x2

Bond Price =∑ [(6*1000/200)/(1 + 5/200)^k] + 1000/(1 + 5/200)^16x2

k=1

Bond Price = 1109.25

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k] + Par value/(1 + YTM/2)^Nx2

k=1

K =16x2

919.5 =∑ [(6*1000/200)/(1 + YTM/200)^k] + 1000/(1 + YTM/200)^16x2

k=1

YTM% = 6.84

BOnd price is inversely proportional to YTM as can be seen in the equation

jeff jeffy answered 1 year ago

Staind, Inc., has 6 percent coupon bonds on the market that have 6 years left to...

Staind, Inc., has 6 percent coupon bonds on the market that have 6 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 11 percent, what is the current bond price? $827.90 $749.05 $788.47 $1,249.87 $1,030.00

SHOW ALL WORK PLEASE!! Sheel Inc. has 7 percent annual coupon (compounded semiannually) bonds on the...

SHOW ALL WORK PLEASE!! Sheel Inc. has 7 percent annual coupon (compounded semiannually) bonds on the market with 22 years to maturity, and the par value of $1,000. At what price should the bonds be selling for if YTM is 5%? Had the bond been selling at $983.55, what would be the YTM (assuming the same coupon, maturity and par value)? Based on your answers above, what is the relationship between YTM and bond price?

Workman Software has 10.8 percent coupon bonds on the market with 6 years to maturity. The...

Workman Software has 10.8 percent coupon bonds on the market with 6 years to maturity. The bonds make semiannual payments and currently sell for 115.8 percent of par. a. What is the current yield on the bonds? • 9.79% • 0.19% • 9.33% • 10.29% b. The YTM? • 7.67% • 3.74% • 7.49% • 11.30% c. The effective annual yield? • 8.01% • 0.09% • 7.63% • 7.46%

Calculate the effective annual rate for each. 6 percent compounded annually. % 6 percent compounded semiannually....

Calculate the effective annual rate for each. 6 percent compounded annually. % 6 percent compounded semiannually. % 6 percent compounded quarterly. % 6 percent compounded monthly. %

Hamilton, Inc. bonds have a coupon rate of 15 percent. The interest is paid semiannually, and the bonds mature in 14 years.

Hamilton, Inc. bonds have a coupon rate of 15 percent. The interest is paid semiannually, and the bonds mature in 14 years. Their par value is $1,000. If your required rate of return is 14 percent, what is the value of the bond? What is the value if the interest is paid annually?

1. Lycan, Inc., has 8.7 percent coupon bonds on the market that have 10 years left...

1. Lycan, Inc., has 8.7 percent coupon bonds on the market that have 10 years left to maturity. The bonds make annual payments and have a par value of $1,000. If the YTM on these bonds is 10.7 percent, what is the current bond price? (Show your work. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) 2. The Timberlake-Jackson Wardrobe Co. has 11.8 percent coupon bonds on the market with eight years left...

1a. Staind, Inc., has 7 percent coupon bonds on the market that have 15 years left...

1a. Staind, Inc., has 7 percent coupon bonds on the market that have 15 years left to maturity. The bonds make annual payments. If the YTM on these bonds is 10 percent, what is the current bond price? (note: when the face value is not given for a bond, assume it is $1,000) 1b. Ackerman Co. has 7 percent coupon bonds on the market with ten years left to maturity. The bonds make annual payments. If the bond currently sells...

1. The bonds issued by Jensen & Son bear a 6 percent coupon, payable semiannually. The...

1. The bonds issued by Jensen & Son bear a 6 percent coupon, payable semiannually. The bond matures in 8 years and has a $1,000 face value. Currently, the bond sells at par. What is the yield to maturity? 2. A General Co. bond has an 8 percent coupon and pays interest annually. The face value is $1,000 and the current market price is $1,020.50. The bond matures in 20 years. What is the yield to maturity? 3. You intend...

An Exxon bond carries a 6 percent coupon rate, pays interest semiannually, and has 15 years...

An Exxon bond carries a 6 percent coupon rate, pays interest semiannually, and has 15 years to maturity. If this bond is currently selling for $950, what is the exact yield to maturity (to the nearest tenth of 1 percent)? ?

A bond you are evaluating has a 7 percent coupon rate (compounded semiannually), a $1,000 face...

A bond you are evaluating has a 7 percent coupon rate (compounded semiannually), a $1,000 face value, and is 10 years from maturity. (LG 3-4) a. If the required rate of return on the bond is 6 percent, what is its fair present value? b. If the required rate of return on the bond is 8 percent, what is its fair present value? c. What do your answers to parts (a) and (b) say about the relation between required rates...